Opinion
04-04-1893
LAMB v. LAMB et al.
J. H. Gaskill, for complainant. Chas. E. Hendrickson, for defendants.
(Syllabus by the Court.)
Bill by Mrs. Lamb, administratrix, against Charles L. Lamb and others to set aside certain conveyances.
J. H. Gaskill, for complainant.
Chas. E. Hendrickson, for defendants.
BIRD, V. C. The bill in this case alleges that the complainant was so aged and feeble in mind and body that she was unable to manage her own affairs, and then proceeds to make such a statement of transactions between herself and the defendant William H. Lamb, her stepson, as to make a strong case for the interposition of a court of equity in her behalf. In brief, the allegations are that the stepson, as executor of his father's estate, made sale of the real and personal estate of the testator, and that the complainant purchased the real estate, and took the deed therefor from the executor, and that afterwards he prevailed upon her to release any interest in dower which she might have had in the premises to him, and to make a deed of conveyance with full covenants of warranty, also, to him, for the premises, and to surrender and deliver to him certain promissory notes and moneys of her own, all of which he kept and retained without securing to her any consideration therefor. The answer is to the effect that the title was taken in her name with the view of transferring it to the said William, and that the said promissory notes and money were given up to him for the purpose of discharging the mortgage lien upon the premises, executed by the testator, and that the consideration for the entire transaction was to secure to her a home on the premises during her life time.
Notwithstanding the distinct allegation in the bill concerning the inability of the complainant to manage her own affairs, and notwithstanding the fact that the defendant was a stepson, and had almost daily intercourse with the complainant, so that he was, beyond question, fully apprised of her physical and mental condition, yet he allowed the case to go to a hearing, and all of the testimony upon the part of the complainant to be produced in open court, before any objection was made because of the want of proper party complainant. After the close of the testimony upon the part of the complainant, and after the complainant had been offered as a witness, and her mental condition was made manifest, then the defendant asked the court for an order directing that the bill be taken from the files of the court. The insistment is that she could only sue by her guardian, citing Dorsheimer v. Rorback, 18 N. J. Eq. 438, and Norcom v.Rogers, 16 N. J. Eq. 484. However forcibly these cases may apply to the proceedings instituted by volunteers in the name of another who has actually been adjudged an idiot or lunatic, and who has a guardian appointed, or who is actually an idiot or lunatic, but who has no guardian, I think that it has not been the practice in New Jersey, and especially not in these latter times, to apply the practice above indicated to cases like the present. The complainant is not an idiot or a lunatic. She has not, nor has she ever had, a guardian. Until quite recently she always managed her own affairs. At the time of the transaction above referred to her step-eon dealt with her in the important matter of transferring and securing the title to real estate of which his father died seised, so that it does not lie in his mouth to charge her with any serious mental aberrations at that time. Again, although it was not the object of this suit to show that the complainant had but very little if any other property or estate than that which is involved in this suit, and which, as above stated, is in the hands and control of William H. Lamb, the stepson, yet it is quite satisfactorily shown that she had no other. This being so, it could hardly be expected that her friend would undergo the expense and trouble of an application for a commission, when almost every dollar's worth of property that might be demanded in her name was in the hands of another, who claimed it as his own. Therefore the court is called upon to determine whether, with such a situation full in view,—an aged and feebleminded person before it, with an opportunity to protect whatever rights she may appear to have,—it will inaugurate such forms or proceedings, and authorize some person to act as her next friend, or dismiss her bill 1 think the latter course would be most harsh and inequitable. It would be subjecting the complainant to great expense and delay without any just benefit to the defendant. It would give the defendant an opportunity to free himself from the most solemn obligations known to the law, in case the allegations of the bill have been sustained by the proofs. Unless it should appear that some injustice would be done to the defendant, or some right of his be infringed, the bill ought not to be dismissed. If there can be a case in which it becomes the duty of a court to favor proceedings which will protect those who must necessarily otherwise suffer loss, this is such a case. I will advise the appointment of a next friend in order that the proceedings may be continued to a final determination. This, I think, is entirely consistent with the practice of the court. See Dick. Eq. Prec. 91, 92, and notes, and 137, and notes; Flight v. Holland, 4 Russ. 298. In this case "the bill was filed by the plaintiff, as an adult, for the specific performance of the contract. After the suit was ready for hearing, the defendant, having discovered that the plaintiff was, at the time of the filing of the bill, and still continued, an infant, moved the court that the bill might be dismissed, with costs to be paid by the plaintiff's solicitor. Upon that occasion the vice-chancellor made an order that the plaintiff should be at liberty to amend his bill, by inserting a next friend for the plaintiff; and the bill was amended accordingly." Owings' Case, 1 Bland, 370, 17 Am. Dec. 311,319,342. In the latter case the court uses this language: "It is laid down that: if a man, by age or disease, is reduced to a state of debility of mind, which, though short of lunacy, renders him unequal to the management of his affairs, the court will, in respect to his infirmities, appoint a guardian to answer for him, or to do other acts, as his interests or the rights of others may require." It frequently happens that, after a case has been heard, the court has felt itself compelled to let it stand over for the purpose of amendment. This undoubtedly may be applied to parties as well as to material allegations. 1 Daniell, Ch. Pr. & Pl. 292.
After a careful consideration of the testimony presented in this case, I have come to the conclusion that the complainant supposed, when she had the property bid off in her name, that she was the actual, bona fide purchaser thereof. I see nothing whatever to induce me to believe that she understood that she was accepting the title for any other. The testimony which has thus influenced me is the following of the defendant William H. Lamb: "Question. (By the court.) How did it happen that you said to her that these expenses were more than you thought? Answer. She was to help pay these expenses,—help pay in keeping her home. Q. What was said upon that point? Just tell me as you remember it. A. I told her the expenses were a great deal more. Q. You say she was going to help towards keeping the home? A. Yes, sir. Q. What was said on that point, in the beginning? A. She was to use all the money she got along to help keep the home. She wanted to stay there. Q. I ask you to go hack to that period of time when you and your step-mother first talked about that business, and tell me all that you can remember of her staying there, the very first. A. Pretty soon after father's death she wanted things settled up. We did not do anything until after the reading of Vashta Burtise's will. Q. She wanted the business settled up? A. Yes, sir. Q. Was there anything said about her staying there before? A. No, sir. Q. When was there anything said between her and you after that? A. Nothing, until I came down the day of the sale of the real estate. Q. What took place on that day? A. It was the morning before the sale. 1 asked Beckie what Elmire expected to do, and I went into her room, and she said she wanted to stay there. Q. Did she say so? A. I asked her, and she said she wanted to stay there. I told her I could not bid on the property, and I would have to get some one to bid, and have it cried off in her name. As executor I could not bid and have it cried off in my own name. I did not want the deed made out of the family. That is the reason I had it done in her name. Q. Did you explain that to her? A. Oh, no. Q. I want to know what passed between you?A. She was to bid on the property. I would buy the property, and she was to get some one to bid, and the property was bid off in her name. Q. Is that all that passed between you and her at that time? A. She was to use all the money she got to help keep the home. Q. She promised you to use all the money she got to help keep the home? A. Yes, sir. Q. Anything else pass between you? A. No, sir." The complainant, at that time, was over 70 years of age. She was anxious, to remain on the homestead, and was willing to give up all of her personal property to accomplish that end. I do not think there is any reasonable doubt but that when she consented so to do, with the view of keeping her home, she expected that she would take the title therefor, and undoubtedly her mind was put entirely at rest upon this point when it was understood that the property was to be bid off to her, and that she should take the title. But. If this should not be so, the burden is upon the defendant to make it appear. In dealing with her it was his duty to exercise the greatest caution, and to present to her in the amplest and clearest manner every right or privilege which she was entitled to under the law. From his own statements it appears plainly that ho did not do this. He left her in entire ignorance as to these important matters. The only hint, according to his testimony, given to her that he expected to use her for the purpose of getting the title to the property in his own name, is found in his declaration that he told her he could not buy the property himself. He did not say to her that "if you will bid this property off, and take title in your name, and then convey it to me, and give me beside all that you have towards discharging the liens upon it, you may live in the homestead the rest of your life-time," nor in any other manner convey to her what was in his mind, and what was really the result of what she did,—that is, surrender everything to him, and to take nothing back from him for her own protection. She released her right of dower in the property, and gave him money and valuable securities worth between $1,300 and $1,800, and her own promissory note for $600, besides the title to the land, having nothing from him except an implied promise, arising from vague conversations, that she might remain in the homestead. As the case stands he had the title and all her estate, leaving her not only penniless, but, in the eye of the law, homeless. Hence her resort to. equity. This case must be controlled by that of Huguenin v. Baseley, 2 White & T. Lead. Cas. Eq. 1156. The principles therein laid down have been repeatedly recognized and followed in this state. Parker v. Parker, 45 N. J. Eq. 224, 16 Atl. Rep. 537; Chase v. Hubbard, 26 N. E. Rep. 433, (153 Mass. 91;) Owings' Case, 17 Amer. Dec. 311.
However worthy may have been the intention of the stepson, it is very clear to my mind that this conveyance to him by her ought not to stand; or, if it be allowed to stand, it should be subject to the rights and interests which the complainant has in the property. If the title be set aside it ought to be upon equitable terms. There was a mortgage upon the premises at the time of the transaction upon which proceedings to foreclose had been begun and carried to a final decree, upon which was due$2,826.40. The defendant paid the amount due on this decree. To do so he borrowed $1,000 of Mahlon Hutchinson, to secure which he gave a mortgage upon the premises. He also applied to that purpose between $1,300 and $1,800 of the assets of the complainant, which she had surrendered to him previously. The balance ho discharged out of his own moneys. He has also paid the taxes which have been assessed upon the premises. The mortgage of Hutchinson, it is admitted, is a first lieu upon the premises. As between these parties, one of two well-settled lines of procedure can be adopted: The defendant may be ordered to reconvey to the complainant the title to this property, upon her paying to him the amount which he advanced in discharging said decree above the Hutchinson mortgage and above the amount paid to him for that purpose by the complainant; or the property may be ordered sold subject to the Hutchinson mortgage, and out of the proceeds of such sale the complainant be reimbursed, and, if anything remain, apply the same to the Atkinson mortgage. While the complainant has lived in the house the defendant has had possession of the land, and therefore I think the taxes ought not to be considered a just lien as between him and her. Under the circumstances of this case I think the complainant should be permitted to elect whether she will take the title on the terms indicated, or the proceeds of a sale. If she accepts the latter alternative, it will be seen that it puts the defendant to a disadvantage to the extent of whatever uncertainty there may be as to the amount to be realized from a sale. But I think the facts warrant me in casting this burden wholly on him. As the case is presented, it is quite unaccountable that he should have voluntarily discharged the whole amount of that decree without a sale. He paid $2,826.40, and when upon the witness stand said the property was not worth more than $1,500; while another witness said it was not worth over $1,200. Consequently the equitable conclusion must be that, if he was acting in the behalf of this feeble old woman, his step-mother, he was guilty of a willful perversion and breach of trust in the use of her money in the discharge of an obligation of another for which she was in no way responsible; and, if he was acting in his own behalf, then certainly a court of equity cannot permit him to profit, and the step-mother to lose, by the transaction; nor can it possibly require her to share the loss with him. From his statements and other testimony in the cause it is very manifest that, if there had been a sale under the foreclosure proceedings, the purchaser would have acquired the title for $1,500 or less. No court can possibly justify an agent or trustee in so liberally squandering the moneys of his principal or cestui que trust. He cannot claim protection untilthe one for whom he acts is made whole. Under these circumstances the court is bound to inquire, further, what decree ought to be made in case the complainant elects to accept the proceeds of sale, and such proceeds should fail short of the amount due to her. In that event the defendant ought to be held responsible. He should be required to make up the deficiency. He knew that, so far as she had any wish respecting the homestead, it was that she might spend the rest of her life there. He knew, also, that, so far as she had any understanding of the transaction between them, she expected that her wish was being secured when she took title to the property from him. With a knowledge of these important facts he volunteered to act for her, thereby making himself, in the eye of the law, trustee to the extent of any moneys or property of hers which she might commit to his keeping. He discharged a lien on which was due almost twice the value of the premises which it covered, paying the whole amount due, using a large sum of her money in part for that purpose. This reveals a very gross abuse of confidence in securing the title in his own name, and in using her moneys for that purpose. It seems to have been deliberately planned, and successfully executed. He certainly ought not to profit by the transaction; and it is equally certain that he ought to protect the complainant against any loss.
I do not find anything in the case to warrant the conclusion that the Atkinson mortgage of $2,000 is bona fide. Counsel for defendant insists that it certainly is to the extent of $600. I am not satisfied that this is so. The mortgage was not given until a long time after the $600 was loaned, and there is nothing that hints towards an agreement even to give a mortgage upon this property or any other but the simple declaration that William promised to secure Atkinson; and it is equally important to note that there is not a particle of testimony in the case to sustain the claim that this mortgage was given to secure this $600, or any other certain sum. According to the testimony both of William and Atkinson, there had been an unsettled account between them covering many years, and when the mortgage was executed no statement of any account had been made or rendered on the one side or the other, nor was there any agreement between them as to the amount which was to be secured by the said mortgage, nor was it known by Atkinson that the mortgage was to be given. Indeed, he knew nothing of it until after it was executed and left with a third person. The execution and delivery of this mortgage gives a most dark and unhappy coloring to the picture. 1 cannot but ask what security had this old lady for her promised place of rest as a home with the mortgages valued at $3,000 upon such home, when, according to the defendant's own showing, it was not worth over $1,500?
The defendant induced the complainant to give him her note for $600 upon the same pretext that he secured from her the notes and money above mentioned. His right to retain this must be determined by the standard above laid down. As the case stands it was procured without the slightest consideration. Whatever scheme the defendant may have had in his mind, which should in some way be beneficial to the complainant, the real product thereof is above shown. It is now perfectly clear that the most ordinary business person would have rejected his scheme, and every phase and suggestion contained in it, as most preposterous and absurd. It amounts to this: "You take title to all your husband's estate in your own name, and then convey it to me in fee-simple, and give me the promissory notes which you have against others, amounting to about $1,000, and advance me $200 or more in cash, and give me your promissory note for $600, and I will discharge the liens upon the property of your late husband, my father, with your money and the money of others, using $200 or $300 of my own, and you may have a home on the premises the rest of your life-time, but you must take my word for that." The note should be delivered up to be canceled. If the complainant elects to sell, the premises will be sold free, and discharged of the Atkinson mortgage. The complainant is entitled to costs.